On Feb.7th, 2012 the Financial Crimes Enforcement Network (FinCEN) finalized regulations that require non-bank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs), as FinCEN requires of other types of financial institutions.
This is a good thing for the mortgage industry since before now there was no single way or place to report fraudulent or suspicious activity when handling a mortgage transaction. The rule of thumb was, if you suspected something, you should tell your broker, manager or underwriter, which left the ball in their court.
The final rule will be effective 60 days after publication in the Federal Register and is available as a 51 page .pdf file. The compliance date for this final rule is six months after publication in the Federal Register.
Among the many mortgage-related scams FinCEN has identified in its reports are false statements, use of straw buyers, fraudulent flipping, flopping, and identity theft.
FinCEN considered requiring RMLOs to use Treasury SAR Form TD F 90-22.47,presently used by banks and other insured depository institutions. The information required for a SAR from an RMLO would be substantially the same as that required of banks and other depository institutions that make mortgage loans and use Form TD F 90-22.47. However, FinCEN is modernizing its SAR filing system and intends to establish a uniform electronic form for use by all financial institutions with a SAR filing obligation. Accordingly, the Final Rule has a delayed compliance date to allow time for industry to implement programs and systems and for FinCEN to implement the new SAR filing system. In addition, FinCEN intends to phase out the manual filing of paper SAR forms. RMLOs will, therefore, be required to use FinCEN’s electronic, webbased E-Filing system under development for the filing of the uniform SAR form. This electronic filing system will not require use of commercial automated systems, but will be usable by anyone with access to the internet.
The new regulations likely will:
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significantly increase the number of mortgage related SAR filings;
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give law enforcement and regulators more comprehensive data on specific crimes; and
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provide government and industry a more complete perspective on mortgage related crime trends nationwide.
In case you are interested, here is the current SAR form . Personally, I think anything that involves the Bank Secrecy Act is intriguing. If it’s secret, it must be cool!